Category Archives: Labor Unions

Licensing vs. Certification

One of government’s favorite tools used to control us is Licensing.  In many states, if you want to sell hot dogs from a cart, build a home, decorate offices, repair cars, shampoo hair, or help someone sell/buy a home, you first need to get a license.  In other words, you are forbidden from performing any of these jobs without the proper licenses under penalty of fines and even jail time.

Many people think licensing is there to protect the consumer.  A license usually means they’ve completed some kind of training or required registration with the proper authorities (whatever that means).  And most people will probably say “what’s the harm in that?  I want to feel safe knowing that my ___ is reliable, safe, and properly trained.”

But does licensing actually protect the consumer?

Most likely, no.

In 2012, The Institute for Justice (IFJ) released a national survey for over 102 low- and moderate-income occupations (meaning, they didn’t look at Doctors and Lawyers).  These are jobs like barbers, massage therapist, landscapers, etc.  One thing they compared were the vastly different licensing requirements between states.  What they found was that there was very little difference between safety and consumer protection if you looked at states that required huge amounts of training / fees / education vs. those that had none or minimal.  A manicurist in Alabama, for example, requires 4 months of Education and Experience and passing 2 exams in order to get a license.  Yet Iowa’s requirement was only 9 days and 1 exam.  Were Alabamian manicurists safer than their Iowegian compatriots?  Nope.

Shampooers (the person that washes your hair at the barber or salon) are licensed in 5 states.  Are the other 45 states seeing increased cases of shampooer malpractice?  Absolutely not.

Interior Designers are licensed in NV, LA, FL and Washington D.C.  They all require SIX YEARS of training / education and passing an exam.  In the other 47 states, there are no licensing requirements at all.  How is it possible that homeowners in these other states can survive without the safety of licensing?

Here’s the kicker.  By comparison, Emergency Medical Technicians (EMTs) are required to perform 1/10th of the training of Interior Designers in order to be licensed (Washington DC actually has no education requirement, but you have to pass 2 exams).

So why does Government require so many licenses in order to work?

The answer is because people in these fields want to keep out competition.  By lobbying their legislators to pass these licensing requirements, existing businesses have created huge hurdles for new entrants into these jobs.  As a result, many people are discouraged from entering in the first place.  Eliminating competition creates job security and little incentive to improve services or lower prices.  If you are the only licensed auto mechanic within 100 miles, you can charge whatever you want and still have a line of customers waiting night and day to do business with you.  Your work could be shoddy, you could take days to complete simple tasks, and still they would keep coming to you.

We see this every day.  Cab drivers that forked over all their savings and even took out loans to secure their precious medallions are fighting tooth and nail to keep out the likes of Uber and Rideshare.  Labor Unions insist cities and public services utilize their members only.  Doctors are the only ones that are able to perform certain medical procedures, even though Nurses, Chiropractors, and Midwives are more than capable.

But without licensing, how can the public consumer have any assurance the businesses are safe or reliable?  What’s to stop some crazy person from performing oral surgery in his garage with a blowtorch or an unlicensed Florist from mixing azaleas with the marigolds or an untrained Auctioneer from yelling “SOLD” too quickly?

One possibility is in third-party certification.  Instead of preventing new entrants into the marketplace, those businesses that truly want to distinguish themselves for investing in the latest training, technology, or safety could hire independent experts to evaluate and certify their businesses.  Consumers can then choose whether to risk going to see an uncertified Shampooer (and maybe paying a little less) or going to see Barb, who has been certified by the Florence Henderson Beauty College.  Libertarians often point to organizations such as UL and Consumer Reports as voluntary, 3rd party reviewers and certifiers that serve the public’s interest of safety and quality much more effectively than licensing.

Competition in the marketplace is a good thing for everyone except for those that want to hold onto their monopoly (and the government bureaucrats whose pockets are lined with lobbyist bribes).  Consumers benefit from lower prices due to increased supply and more variety of choices with respect to quality / certification.  Those looking to start a business benefit because they can more easily enter into the marketplace without costly start-up requirements.  Existing / higher-end businesses also benefit because if they offer superior quality and services, and customers are looking for that, they can easily distinguish themselves through certification.

It’s time to start cutting back on all the Protectionism and bureaucratic red tape imposed on us by the government and their cronies.

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Do you even know what you’re saying?

Socialism, and her inevitable offspring Communism, are gaining popularity once again.  Visions of Che Guevara swell in the hearts and on the T-shirts of the ‘working class’.  Students flock to the local Leftist “Equality” rallies, iPhones and Starbucks Gluten-Free-Mocha-Frappa-Caramelitos in hand.  Disgruntled workers, not feeling the love, covet their CEO’s bonus payout last year without the slightest clue of what it takes to run a company that may employ tens of thousands of workers.

And why not?  On the surface, there’s some appeal to the idea of Socialism.  Why wouldn’t we want everyone to have guaranteed food, shelter, education, medicine, clean air, pothole-free roads, high paying jobs, time and money for vacations on the beach, USDA Prime filet mignon for dinner every night, or blazing fast wifi?  Unless you’re a real sociopath, no one wants to actively prevent someone from having these things.

The problem is that in reality, everyone can’t simply have all of these things just because we want it to be so.  As I’ve written previously, the fundamental truth of economics comes down to 2 basic, opposing forces – the insatiability of our appetites vs. the scarcity of available resources.  You cannot completely satisfy even a personal insatiability because of the scarcity of resources, much less the desires on a national or global scale.

Don’t misunderstand.  That’s not to say individuals cannot find contentment in their situation.  We may resolve to be content with what we have.  But tomorrow, we will be hungry again.  We will need shelter again.  We will want electricity and heat and water again.  That’s what it means to have an insatiable Demand over time.

Despite these fundamental truths, modern Socialists want you to believe that it IS possible for a central planner to gather up all of the resources and equitably parse them out to the masses.  They also want you to believe that in this fairy tale, individuals will choose to work, not for selfish gain, but for the good of humanity.

Can a central planner actually accomplish this better than the free market?

This clip from Milton Friedman explains why no one can even build a pencil on their own.

What is Socialism?  How do they propose to distribute all these goods and services for everyone to enjoy?

Here’s a quote from MarxMail.org —

Instead of wanting to take away people’s private property, socialists want more people to have more private property than ever before.

There are two kinds of private property. There is property which is personal in nature, consumer’s goods, used for private enjoyment. Then there is the kind of private property which is not personal in nature, property in the means of production. This kind of property is not used for private enjoyment, but to produce the consumer’s goods which are.

Socialism does not mean taking away the first kind of private property, e.g. your suit of clothes; it does mean taking away the second kind of private property, e.g. your factory for making suits of clothes. It means taking away private property in the means of production from the few so that there will be much more private property in the means of consumption for the many. That part of the wealth which is produced by workers and taken from them in the form of profits would be theirs, under socialism, to buy more private property, more suits of clothes, more furniture, more food, more tickets to the movies.

More private property for use and enjoyment. No private property for oppression and exploitation. That’s socialism.

So first off, Socialists want you to have MORE private property by taking away your second kind of Private Property.

wait-what-meme

But let’s take a closer look at this nonsensical banality.  You have the right to your property for use and enjoyment, just not the things that will produce more property for use and enjoyment.

How many of you have 2 separate bank accounts – one for your use and enjoyment (say a checking account) and another for producing more money (say an IRA or Savings account)?  Well, that second account would become property of the Socialist State.

For those of you that are business owners or employers, how many of you sacrifice some of your “use and enjoyment” private property to invest in your business or to create jobs for employees?  Well, you might want to reconsider because the Socialist State would immediately seize your tools of exploitation and oppression.

So what’ you say?  As long as there’s equality and people’s lives improve, isn’t that good?

Let’s imagine if we measured the Total Global Production of Goods today, and declare it be equal to 100 units of measurement (let’s call them widgets).  So as of Jan 24, 2015, there are 100 widgets in the world today.  Socialist believe that if the global population equaled 100 people, well then each person would get, on average, 1 widget to consume.  (True Socialists differ from hard-lined Communists in that they won’t distribute the stolen goods equally per person, but that’s another topic).

So what happens when 100 widgets are consumed?  Will they all be replenished and can we continue to perpetuate this rate of consumption once we take away Private Property (Capitalism and Self-Interest)?  Will consumption remain constant or might it grow?

Ask yourself – what if you could continue to consume what you do today (or even consume MORE than what you do today) without increasing your workload?  What if not a single hour of additional labor would net you any additional benefit in compensation?  You get paid regardless of if you work 8 hours a day or 4.  Would you work as hard as you do?  Would anyone?

I don’t know if you’ve recently been to the United States Post Office.  Take a look at the floors, the walls, the supplies stations.  Even the self-service kiosks.  Unlike privately-owned businesses that are meticulously maintained in order to keep customers satisfied, most of the time the USPO is filthy, out of supplies, understaffed and totally run by clock watchers.  Try walking into the Post Office with a stack of packages at 5:01 pm when the place closes at 5:00.

So now think about the 100 widgets being consumed.  Is there any likelihood those consumed widgets would be replaced or even grow past the current level when you take away the incentives to work harder and longer?

Of course not.  In fact, very quickly, the Socialist State has to scale back their promises of free goods and services, institute rationing and price fixing, and nationalize mandatory labor (e.g. slavery) in order to keep the State alive.  Forget about iPhones and free wifi or healthcare and education.  Now, you can’t even manage to keep everyone fed.

When this happens, you have gone from the Socialist’s Pipe Dream to the hard reality of a Communist State.

So what’s so bad about the Communist State?

Plenty.

Now, any lingering seed of individualism or free thinking is met with severe hostility, violence, persecution, torture, starvation, and death.  This account of the horrific genocide perpetrated by Mao Tse Tung on his own people should be a sobering wakeup call for those who live on some Fantasy Island thinking that we can just take everyone’s property for the good of the people, yet production will be able to keep up with the increased demand.

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(okay, I added a bit of truth to this Socialist propaganda.)

Even more disturbing to me are the attempts by Socialist fan boys to re-write or ignore history.  Like Mao, the history of Stalin, Russia and the Soviet Union is written in the blood of millions of people, murdered and tortured by their own leaders.  This film of the Soviet Story is disturbing but must be shared.  If you watch to the end, what’s particularly alarming are the current trends in Russia under Putin to go back to the days of Stalin and ethnic cleansing.

You can also go here to see the film with full English subtitles.

Now I know there are still some naïve daydreamers out there, sitting in your dorm rooms, looking up at your Bob Marley posters, sipping your dandelion tea and thinking “we would never resort to killing and violence and torture in order to achieve equality.  We just want to stand up for the 99%.”

So to you, let me ask you this:  If I choose to ignore your demands on my Private Property, if I refuse to fund your regime with my taxes, if I protest anything that has to do with “contributing My Fair Share”, if I stand defiantly at the doors of my business and do not allow you to come in and take what I’ve created or earned – WHAT IS YOUR NEXT COURSE OF ACTION?

Will you leave me alone?

Will you go pick on someone else instead?

Will your master plan survive with the existence of Choice?

In the game of chicken, the trick is knowing when to flinch.

Despite the fact that the majority of economists agree that raising the minimum wage increases unemployment, particularly for those most at risk (young, inexperienced, under-educated), politicians and left-wing advocacy groups keep pushing.  $10/ hr.  $15 / hr.  Sky’s the limit.

The cavalier manner with which advocates assume employers  (particularly the big corporations) will simply pay more for something without reducing consumption (in this case, labor) reveals their ignorance. The pervasive perception among these whiners is that corporations are at the mercy of ‘the people’. If they print enough bumper stickers and T-shirts and march in the streets, certainly their politicians will bend over backwards to appease them. Why wouldn’t the greedy CEO?

The problem with their assumption is that the big, corporate CEO has a plethora of options available before overpaying for labor. It’s well known that manufacturing and customer service companies can easily move overseas. Recently, companies have announced plans, like Walgreen, to move their corporate headquarters overseas to lower their taxes.

There are obviously many businesses like services, health care and transportation that need to have boots on the ground in order to operate. But they, too, will adjust their consumption of labor if the cost is high enough. Instead of hiring 3 employees, the company will hire 1 who will end up being overpaid and overworked.

Real economic prosperity comes from the unencumbered, totally voluntary, free market where prices reflect the intersection of supply and demand. Any constraints placed on the free market invariably create more problems than they claim to solve.

Random thoughts about Labor Unions

Just a quick follow up about topic that came up during our Discussion Group on Labor Unions.  Right now, AMR (aka American Airlines) is in bankruptcy court negotiating with the union reps on how to keep their company afloat.

Everyone has an opinion about Labor Unions, and it can usually be categories into 1 of 3 categories —

  1. you love them because you or someone you care about are in a union,
  2. you don’t know anyone in a union and you hate and blame them for everything wrong in capitalism, or
  3. you believe they’re a necessary evil because they are the guardians of justice in the workplace.

I’ll admit that I was in the second group prior to reading “Economics in One Lesson” by Henry Hazlitt.  He covers one chapter entitled “Do Unions Really Raise Wages?” which made me look at them differently.

So, when you think about the history of unions, most people get these pictures of the industrial revolution, child slave labor, horrible working conditions and the big, fat, greedy bourgeois capitalists getting rich while sending the proletariat, working man to the hospitals or the grave.  But are unions really performing this public service today?  ‘Of course’, you may say.  Immediately, people then think about places today like China or Bangladesh and the ‘sweat shops’ used to make our jeans.  But I’m talking about in the United States.  We’ll get to China.

Hazlitt argues that there is a right and morally justified place for Labor Unions.  The pre-industrial farmers were attracted to the cities to earn a steady, guaranteed wage vs. having to wait and hope that they would have a successful harvest.  Thus, you saw a huge surplus of labor coming in.  Producers, on the other hand, had no incentive to improve worker safety, negotiate with individuals, or pay more than the absolute lowest wages possible.  (Again, not too dissimilar to what we’re seeing in China today.)

So free men came together, organized, protested and negotiated better working conditions.  The employer had a choice — either to negotiate with the group or to fire them all and go seek new labor.  Hazlitt would argue that this is the proper and just use of collective bargaining to balance the imbalance of surplus labor / limited demand.

Here’s where the labor unions, however, have gone overboard.

Most often, union leaders will not “allow” non-union members to be employed in the same company.  They force management to only hire unionized labor.  They accomplish this through threats – verbal, physical and otherwise – in order to maintain their privilege and protected status.  THAT is an abuse of power and will ensure corruption.

If labor unions truly were interested in improving working conditions, employee rights, and “fair” wages, they need to allow participation in their league to be a choice, not a requirement, of employment.  And management should be allowed the choice to hire non-union individuals or negotiate with the collective whenever they want.  Otherwise, unions turn into nothing more than a gang of thugs interested not in promoting fairness but elitism.  A rose by any other name . . .

Now what about China?

The problem with our western view of China is we are superimposing our standard of living, rights, and legal precedents on a country that is just starting to emerge from the strict communist controls that have been around for decades.  It makes absolutely no sense to say people (for example, not necessarily China) in countries with no roads, utilities or commerce infrastructure should expect the same conditions of living and pay that we expect in the US.  That’s not to say that they can’t get there eventually.

But think about the cost of living differences between Beverly Hills and small town Nebraska.  Would it make sense to argue that employees in Nebraska should be paid the same wages as those in 90210? Why are prices in the same state so vastly different from town to town?

Unions may become necessary someday in parts of China or India if employers are not willing to meet the wage demands of the workers.  But hopefully they will not follow the pattern of US Labor Unions intimidation and exploitation to create protected classes of workers or industries at the expense of creating new or better jobs.